Februrary Trend Trader

I decided to go with the posts titled “trend trader” for use explaining the individual industries and stock and etf selections and their weightings. The Trend Report will instead just analyze the market, the economy, etc.

When you expect the market to move strongly to the upside, and present high upside, limited downside with a good probability of success, you want to increase your Beta, that is your leverage to the overall market. The Trend Report is about trying to best understand the conditions to make those shifts to position your beta properly to be aligned with the market and your percentage allocation of “risk on”, “risk off” and “neutral”.

The Trend Trader instead is about Alpha. It is about individual names that present a good return on a low risk. A high individual margin of safety.

We will first analyze the sectors. This was mostly done in late January but I haven’t gotten around to completing it until now.

The mexican peso for example looks great on a valuation basis and on a chart on a monthly basis, but the daily/weekly chart timing is terrible. You could add a FXN position and intend to increase the position it if it pulls back, and hold for awhile.

On the contrary, FXE is looking good on a weekly chart, but does not look to provide much of a margin of safety.

Keep in mind that the euro can only be traded as one currency, however the bonds are sold separately so it is possible, but a bit more difficult to get exposure to the individual euro countries debt markets.

Currency ETFs for above that are available

icn/inr,fxm,fxru,bzf,cyb,uup,szr

Since prices change daily, valuations will as well, so you probably want to check everything over before making a decision, but this should give you a good range of selection from which you can determine which assets you want,
and then how to weight them… taking into account correlation and the overall outlook of the market based upon February trend report. You may want to use the guide to investing in stocks that I constructed to sort of explain how to bring the big picture together.